Employment freedom of
contract is under attack. The last two decades has witnessed an unprecedented
assault on one of the last frontiers of free contract, the employment
relationship. The ability of individuals to freely choose whom they will work
for and who will work for them is being undermined by activist jurists and
legislators, cheered on by liberal academics determined to see public control of
most aspects of private life.

Michigan has been in the forefront of this assault. While pretending to preserve "employment-at-will" freedom of
contract, the courts of Michigan have made Michigan common taw a national beacon
for public control of the employment relationship. Combined with one ofthe nation's most extensive array of state
statutes circumscribing the employment relationship, Michigan can truly be said
to have virtually eliminated employment freedom of contract.

The
consequences of this public takeover of the employment relationship are becoming
readily apparent. Michigan's courts are clogged with employment litigation,
employers have turned defensive hiring and firing measures into a fine art, and
the cost of doing business in Michigan, which was already high, has become
prohibitive. Legal confusion reigns, as employers wait for the next edict from
Michigan's activist Supreme Court.

The
practical result has been the loss of millions of dollars in litigation costs
and forfeited managerial opportunities. Michigan is losing business. Employers
are leaving for states with more business-friendly legal environments,
especially to the South. Out-of-state employers looking to expand their
businesses are rejecting Michigan as a possible site. Employers willing to stay
in Michigan are finding themselves steadily less competitive as more of their
costs are lost in the mire of employment law rules and regulations.

Yet
have Michigan's employees really gained anything? This paper will argue that the
losses have far outnumbered the gains. The destruction of employment-at-will has
not enhanced the employment setting, but instead burdened it with uncertainty,
high transaction costs, and reduced opportunities for both employers and
employees. The process by which employment-at-will has been eroded has been
fueled by numerous myths about the virtues of publicly-controlled employment
contracts – myths which upon closer examination have little reality to support
them.

Myth:
The labor market is a system of supreme employer power in which unfairly
terminated employees have their economic lives devastated, with nowhere to turn.
Employees are at the whim of all-powerful employers who determine the conditions
and existence of employment. In fact, the American labor market is
extremely mobile, exhibiting constant, vibrant bargaining between employees and
employers. Employees exhibit great bargaining power to establish their pay and
conditions of employment.

Myth: Employees
need legal assurances of security in the employment setting in order to receive
"fair" treatment from employers. Replacing employment-at-will with "good cause"
rights ensures such "fair" treatment. In fact, the shift from private
determination of the employment relationship to public determination simply
shifts the power to decide the employment contract from the parties to judges,
juries, administrators and legislators. There is no more assurance of "fairness"
from these latter sources than can be achieved one-on-one between the employee
and his/her employer.

Myth: Extensive
employee access to the judicial system is essential in order for employees to
have effective "rights" in the employment setting. Employees need the courts in
order to have equal power with employers. In fact, judicial resolution of
employment disputes dissipates employee power by imposing high transaction
costs, great uncertainty about employment rights, and total dependence an
attorneys. The supposed tyranny of the employer is replaced with the certain
tyranny of the expensive lawyer. Judicial resolution of disputes also results in
formalized, rigidly-adhered-to employment procedures and manuals which eliminate
flexibility for either the employee or the employer, to the detriment of both.

Myth: The
entire civilized world, with the exception of the United States, has established
good cause employment rights. The good cause standard for employment must
therefore finally be established in this country just to keep pace with the rest
of the world. In fact, comparison to other industrial nations is
misplaced. Remedies are extremely limited in most nations, and the context for
employment dispute resolution is not oriented toward extensive litigation, but
to quick determination of rights. For a comparison to be accurate, a complete
change in the American system of dispute resolution would have to be
accomplished first.

The
recurring image conjured up by advocates for the demise of employment-at-will
comes straight out of the fictional world of Sinclair Lewis and John Steinbeck.
In this world, the brutal, mischievous boss is a callous monster, mistreating
employees out of sheer personal spite. The employee is a virgin-pure hardworking
saint, trying his/her best despite the many obstacles of low pay, unsafe work,
and constant mistreatment in his/her path. There is no bargaining, no mobility,
and no freedom of contract – there is only the master and the servant.

But
this image does not comport with the reality of the American marketplace. The
American economy is robust and growing. It has made American workers the best
paid, most productive, economically well-off citizens in the world. Of course
there are abusive employers. Of course there are limits on mobility and the
ability to bargain. But these are the fringes of the system, the exceptions to
the rule. One does not destroy an entire system of contract, with all of the
resulting loss of freedom, just to address these aberrations.

This
paper will argue that the abandonment of employment-at-will is a mistake. We
will trace the history of employment-at-will law, with particular emphasis on
Michigan's departure from the traditional path. We will examine a few of the
statutory proposals and models that advocates have forwarded to replace
employment-at-will, including the proposal of the National Conference of
Commissioners on Uniform State Laws. We will also examine the financial and
managerial consequences of departing from employment-at-will and discuss the
pros and cons of replacing the traditional doctrine.

It is
the ultimate goal of this paper to suggest that Michigan has erred by abandoning
employment-at-will. It will propose a return to traditional free contract law,
for the sake not just of employers, but also of employees. This paper is
designed to join the debate about the future of employment contract law and
suggest that the academic and judicial plunge toward publicly-controlled
employment contracts is not the inevitable consensus path good public policy
demands. This debate is not just a theoretical exercise. At stake are real
business opportunities, real jobs, and the very future of Michigan's economy.